The Rio 2016 Olympics were definitely a magical and crazy event. We have witnessed not only many great gold-grabbing moments, but also the rapid rise of "network stars", witnessed the multi-personality on the world's largest stage, which is very good. But the problem is that when television becomes less important, fragmented video-on-demand becomes a trend. The stories of sporting events and advertisers seem to be really about to change.

Mark Lazarus, chairman of NBC Sports Group, told Sports Illustrated's Richard Deitsch over the weekend that he was pleased with NBC's performance at the Rio Olympics:

 "Obviously my point of view is biased, but I'm once again convinced that NBC has accomplished a masterclass in programming, from the quality of production, the quality of narrative coverage, to the preparation we make for any news event, as evidenced by what viewers see on their screens," Lazarus said. "Everyone is comparing the London Olympics to the London Olympics, which are A-plus, and Rio this time it's A-plus. We're doing really well this time, people's habits of using the media are changing, we're changing, and we're leading the way with some different programming. "

Comparing the London Olympics to NBC is hard, at least in terms of ratings. Even when Bolt's race was first broadcast live in prime time, NBC had a ratings rating of 14.9 million and 26.7 million viewers on Sunday night, compared with 17.5 million on the same night four years ago, 31.3 million viewers and 16.0 million viewers and 27.2 million viewers on the same night eight years ago. In fact, NBC's ratings were the lowest on Sunday since 1984 (the addition of online video and other channels helped with the numbers, but still lower than in the previous two Olympics), resulting in an average 17% drop in ratings compared to four years ago, when the show showed a drop in ratings almost every night.

But Lazarus still has reason to be happy: NBC sold $1.2 billion worth of ads, even before the Games began, 20 percent faster than at the London Games. While NBC may have to "compensate" advertisers for its low ratings, total advertising revenue , including digital platforms and other related advertising revenue , is expected to surpass the $1.33 billion of the London Olympics , Lazarus announced in a conference call"This is the most cost-effective sporting event in NBC's history."

The contrast between ratings and ad revenue is an interesting one: How does NBC sell more money and more ads at a lower rate? The answer to this question is the same as the theme the author has been exploring this summer: NBC advertisers have no other choice.

The symbertic relationship between television and advertisers

In "The Surprising Strength of Television Advertising - and the Inevitable Decline", the author points outTelevision's biggest advertisers are predictable in size (not unusual), and they all serve the mass market. The list is dominated by consumer products, telecommunications, automotive, retail and credit card companies, as well as by the same industry.According to Kantar Media, the top 10 advertising sponsors for the Olympics include General Motors, BMW (Automotive), Procter and Gamble (Consumer), AT&T (Telecom) and Visa (Credit Card). Although no retailers made the top 10 list, the retail sector still ranks second in total sponsorship.

The article's main point is not only to express that the traditional television industry is "bundled" with its advertisers, but also to point out the power of trends that weaken television ratings, but also to influence television advertisers, especially young groups. Examples emerged in the weeks after the article was published, such as Unilever's acquisition of The Dolar Shaving Club and Wal-Mart's high-priced purchase of Jet.com. Of course, old-school companies also have digital advertising budgets, but they may be less than expected.

The symboxical relationship between television media and its advertisers means that the two parts are likely to remain in a stronger and longer state than we expected, albeit paradoxically.It's easy to run digital ads entirely using on-demand online playback models, relying on e-commerce models to deliver digital ads, but it's not clear what will trigger the change that will lead us from the present to such a future.That's why I'm so interested in ratings.

Key sports programs

The importance of sports programming to television is well known, but it may not really be recognized. I wrote three years ago,Live sports programming may be TV's most irreplaceable "job"Last year ESPN's fees were the highest in history and the largest increase so far, followed by TNT (basketball) and NFL Network (football). When local sports television stations are counted, the situation is even more obvious.

This suggests that there is a broad basis for television stations to switch to subscription fee models, whether associated or direct. The reason sports programs are so special also includes that it is an important part of one of the most important sources of revenue for television, and that is advertising. For radio and television networks, sports accounted for 37 per cent of advertising receipts, compared with 29 per cent five years ago, when sports programmes accounted for 10 to 12 per cent of total programmes. Sports-focused cable channels also make big money from advertising, with espN leading by $2.4 billion (plus ESPN2's $360 million) and NFL Network with $407 million. Basically, sports programming is growing (from Fox's 4% compound annual growth rate to NBC's 15% compound annual growth rate), while non-sports programming advertising has been declining at a rate of 1% over the same period over the same period of the past five years.

The reason to stress again the data that these readers probably already know is that the author wants to throw out a point:Sport is the key to maintaining the entire post-war economic order. Because sports programs are consumed live, and advertising and audience numbers are staggeringly high.Sports programming is becoming the only reliable way for mass-market consumer companies to reach customers on a large scale and compete with e-commerce companies in the lily market for a customer base. This effect, in turn, is amplified by the role of sports programming in stimulating cable-tv bundling charges, allowing more television stations - that is, more ad inventory - to survive (not to mention some of the station's biggest advertisers, also entertainment companies, which also own cable channels).

The big problem with NBC's disappointing ratings for the Rio Olympics is that if sports lose its appeal to a wide audience, the industry is in danger, not just NBC.

Good news and bad news

But it's too early to panic: the easiest explanation for the ratings figures is that NBC isn't playing to the biggest intrinsic advantage of sports programming, which is live broadcasting. In 2005, 14 per cent of the first 100 programmes watched live were sports. This proportion rose to an incredible 93% last year due to the rise of DVRs and the follow-up to online on-demand. I certainly understand that it's hard for a sport like gymnastics to perform live, even if it's prime time to move airtime from the afternoon to the evening, but getting a message a few hours before the result doesn't help ratings.

The Internet has been around for a long time, and NBC has been using tape and video for decades, but over the past few years, especially in the last eight years, there have been games where you didn't even know if you were going to watch them before NBC aired, but the results have been known in advance and it's been very difficult to avoid that. This new reality is certainly bad news for NBC, and it calls into question Lazarus's use of the word "masterclass" to describe NBC's content production, but all the other sports players can breathe a sigh of relief.

On the bad news side, NBC's ratings figures are particularly bad among the younger generation. In the first ten days, it dropped 17 percent, to 25 percent among 18- to 49-year-olds, recreating ratings patterns for several other sports, including the nation's most important sport, American Football. The NFL's record-breaking ratings are true, but over the past decade, the average audience age has risen from 43 to 47 (a much higher number than baseball's 46 to 53; basketball has steadily remained at 37), while live-streaming platform Twitch (8.5 million daily active users, mainly men aged 18 to 49) has seen a surge in audience size. In the long run, it is unclear why sports programming will be protected from the explosive growth of platforms. Every content market has been segmented except sports programs.

Young people are still watching the Olympics: NBC's on-demand trend is clear, with 50 million people tuning in on SnapChat. The data has a deeper meaning:Sports programs are being demoted from mass media centers to small pieces of content aggregation platforms.That's why the most worrying thing Lazarus mentioned in the conference call described earlier is this:

Watching NBC broadcasts isn't the only way people consume the Olympics, just as newspapers and magazines aren't just being consumed through print. NBC's prime-time programming will continue to be the most important way for people to consume Olympic content, but we also understand that prime time is actually "my time" for millennials and younger viewers, who want to watch the show their way, which is why in the future we're going to adjust to audience habits through multi-platform coverage.

An important rule: Whenever you compare your situation to that of a newspaper or magazine, you're in big trouble.It's true that all types of publications have more audiences than ever before, but their business is no longer a target for advertisers, but a Facebook content. One of the biggest questions on my mind - and the biggest question mark in the minds of all business executives - is whether sports are on the same path:Today is still a must-see for TV shows, but tomorrow it's just a video stream on SnapChat.For all industries, the significance of this issue cannot be overemphed.

The original text is from Stratechery

Author Ben Thompson

Original title The Sports Linchpin

Compiled by tiger sniffing.